CEZ: E.ON cooperates with Czech Coal

Czech Coal, the owner of Mostecka uhelna (MUS) announced sale of majority stake in thermal power station Otrokovice and Energetika Malenovice to German E.ON, which is second biggest distributor of electricity in Czech Republic. So far E.ON is generating electricity only in small sources, however intends to expand its production here. Cooperation with Czech Coal may open possibilities to construct new power plant in region of Northern Bohemia; nevertheless coal reserves are crucial for such an expansion. CEZ has similar plans of expansion if coal limits are broken. Note that separately, Czech Coal sold 40% of MUS to Indoverse Czech Coal Investments, a local financial institution earlier this week. About 1/3 of CEZ’s coal consumption comes from MUS. Although CEZ has long-term contracts with Mostecka uhelna for coal supplies the sale may represent a risk to these contracts. We see the news as slightly negative however reiterate our Buy recommendation.

Severoceske doly shares to cease trading today
Shares with Severoceske doly will cease trading today at the Prague Stock Exchange and RM-System as CEZ should become the only owner following the minorities buy-out.